Macroeconomic policy: Difference between revisions
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'''Macroeconomic policy''' is concerned with the use of the instruments of [[fiscal policy]] and [[monetary policy]] to counter the destabilising effects upon the economy of an [[shock (economics)|economic shock]] such as commodity price surge, | '''Macroeconomic policy''' is concerned with the use of the instruments of [[fiscal policy]] and [[monetary policy]] to counter the destabilising effects upon the economy of an [[shock (economics)|economic shock]] such as commodity price surge, | ||
a [[panic (banking)|banking panic]] or the bursting of an [[asset price bubble|housing price bubble]]. It is about decisions | a [[panic (banking)|banking panic]] or the bursting of an [[asset price bubble|housing price bubble]]. It is about decisions | ||
taken in | taken in anticipation of, or in response to, a [[downturn (economic)|downturn in economic activity]], and it is also about decisions concerning the [[fiscal consolidation]] measures needed to correct an increase in the [[budget deficit]] resulting from such a downturn. | ||
The decisions required in both cases concern the selection of instruments and the determination of the magnitude and timing of their application. | The decisions required in both cases concern the selection of instruments and the determination of the magnitude and timing of their application. | ||
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Revision as of 16:26, 2 March 2013
Macroeconomic policy is concerned with the use of the instruments of fiscal policy and monetary policy to counter the destabilising effects upon the economy of an economic shock such as commodity price surge, a banking panic or the bursting of an housing price bubble. It is about decisions taken in anticipation of, or in response to, a downturn in economic activity, and it is also about decisions concerning the fiscal consolidation measures needed to correct an increase in the budget deficit resulting from such a downturn. The decisions required in both cases concern the selection of instruments and the determination of the magnitude and timing of their application.